The Numbers Game

This week’s Courier Herald column:

Quietly and without fanfare, Georgia is now the eighth largest state according to the U.S. Census Bureau. Their numbers have us passing Michigan in their last official estimate. As of 2013, we’re just a few thousand short of ten million people calling Georgia Home.

After a few years of pause to regroup during the recent financial crisis, Georgia is growing again. Much of the problems within the real estate and banking sectors have worked their way out. Our airline and other transportation logistics companies are thriving. Companies such as Caterpillar and Baxter are opening new major facilities in Georgia, while others such as State Farm are consolidating their operations to our state, bringing with them thousands of new jobs.

Georgia has had little to invest for growth during the previous lean years, and has instead focused on “competitiveness”. Tax cuts have been targeted at luring and maintaining manufacturing industries, such as elimination of manufacturers taxes paid on electricity. Georgia’s positioning and rankings in this area are a focal point of debate for this year’s contest for Governor.

A new report by Georgia State’s economic forecasting office seems to demonstrate that we’re adding jobs again, with a projected 20,000 net new jobs to be added per quarter for the foreseeable future. As has been the custom for the past few decades, Georgia’s jobs base is growing. With this success comes population growth as others are attracted to these positions. And with this growth comes both challenges and responsibility.

As Georgia begins to look ahead, we see that we’re likely to only be in the 8th spot for population for long. Georgia’s population grew 19% in the seventies and eighties, a whopping 26% in the nineties, and 18% in the last decade. Ohio, 7th in population, has grown less than 2% per decade over that time period, as has Pennsylvania at number 6. Illinois, at number 5, has fared slightly better, but still under 4% per decade.

What does this mean for Georgia? If we grow at just the pace of the slowest decade of the past four, we will be roughly tied with Ohio for the seventh largest state at the next census. Further, within 25 years, we will pass both Pennsylvania and Illinois to be the fifth most populated state in the country. Only California, Texas, New York, and Florida will have more residents.

It also means that when this happens, we’ll have to make room for four more million people. That is no small task, and requires vision, planning, and execution. It will also require investment.

Georgia has spent much of the economic downturn maximizing efficiency in our roadways. We are utilizing technology to synchronize traffic lights and meter on ramps to freeways. We incentivize tow truck drivers to clear truck accidents faster. Georgia partners with State Farm Insurance to provide HERO units to assist troubled motorists. This helps reduce much of the current congestion caused by the unplanned activities of motorists.

There have been commitments to new investments as well. Additional managed toll/HOT lanes will be added to metro Atlanta’s freeways to add capacity in and out of the city during rush hours. Major interchanges have been funded for redesign. And the city of Atlanta is adding streetcars and planning for a Beltline transit loop.

We also have secured funding for deepening the port of Savannah, which will increase the freight coming into Georgia and continue our growth as a logistics center. This opportunity will also present additional challenges, as much of Georgia’s freight rail network is currently operating at maximum capacity. Additional rail investment will be needed, or otherwise much of our port traffic could end up on our roads, increasing already crowded conditions.

That brings us to the issue of spending. Significant portions of the sales taxes (taxes based on the “user pay, user benefit” bargain made with Georgia’s voters) that come from the sale of motor fuel are diverted from their intended purpose into other purposes. Consequently, Georgia continues to maintain its dead-last spot in per-capita funding in the United States. Dead. Last.

We have not modernized or reformed our convoluted motor fuel tax structure in decades. As a result, our transportation program relies on the federal government for 62% of our annual capital and maintenance spending. Our largest transit system is the only major transit system in the country that does not receive state support. Our freight rail providers operate primarily without state support.

For a state that has “logistics in our DNA” as Atlanta Mayor Reed likes to say, we’re frankly not even keeping up, much less preparing for a growth rate that will make Georgia a top five state.

Georgia is a competitive and attractive state to live in and operate a business in, with our logistics network a primary contributor to both our economic competitiveness and our quality of life. This is not something, however, that can ever be taken for granted.

Laurels that are rested upon are frequently lost in our competitive world. Georgia weathered a severe blow to the gut during the financial collapse and has emerged stronger and leaner. The results of our actions are beginning to show, and others are again flocking to our success.

The time is now to plan to build on this and prepare for growth, less we let our success become the catalyst for our future failures.

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45 comments

Are there any citizen initiatives that are seeking to get out legislature to move on transport revenue changes? On a less serious note, are our welcome wagon committees training all these Yankee immigrants on our ways?

I’ve always said that the gas/fuel tax should be a percentage instead of a flat fee per gallon. This would help offset the effects when/if prices go up and folks buy less gas/fuel. However, the public wants to see their current transportation tax dollars spent more efficient and better priorities set. Also, many of our transportation woes/congestion is due to not providing/developing sufficient detours prior to new road construction and not clearing accidents more quickly. When the public sees better leadership in areas such as this we’ll be more open to increased “productive” investment… As opposed to just increasing the margins for the political cronies.

Fuel purchases in the short term are very inelastic. Revenue increasing due to price increases while travel demand is decreases is exactly the opposite of what’s desired. Fixed fee per gallon that is adjusted for inflation and general fleet mileage is the best way to provide steady revenue matched to travel demand.

“taxes… that come from the sale of motor fuel are diverted from their intended purpose into other purposes.” Yeah, that happens a lot down at the Gold Dome, which is why I always vote against any of these amendments that come to the ballot justifying tax increases to fund specific initiatives – usually in the form of “We’ll raise fines/fees/taxes on A,B,C group of voters (or products, or activities), and the money we raise from that will ONLY be used for pre-natal supplement provision for the minority poor (to use one imaginary example, but it’s in line with say gas taxes used for roads, or cigarette taxes used for smoking prevention and healthcare). But, uh, don’t hold us to that too closely, OK? Because if we have some gaps in the general budget we may raid this fund to plug the hole. In fact, you can count on it.”

That’s how it almost always goes down. They say the money is only for certain spending, and when the public has forgotten about the program completely, they start siphoning off that money for other things.

Amen to that Dr. There is no incentive to change the funding formula under the gold dome and until the voters bring considerable pressure to bear on the legislature it will not change. They will keep diverting funds from roads, 911 center upgrades, tire recycling and every other cause, until the State Constitution is amended. For now the money for road repair will continue to build go fish museums.

There’s no way on God’s green earth that a fast-growing state like Georgia should be dependent (or overdependent) upon the financially-troubled federal government for 62% of its transportation budget.

With Georgia’s robust population growth numbers and exceptionally-valuable logistical assets (the Interstate system, the world’s busiest airport, the freight rail hub and network, the fast-growing Port of Savannah, etc), the state should be able to easily leverage the tens-of-billions (if not hundreds-of-billions) in critically-needed transportation funding from the private sector.

The state could privatize the Interstate system (and large parts of the metropolitan arterial road network), the airports, the seaports, and the current and future passenger rail network, and could further privatize the freight rail network and largely eliminate them as expenditures to the state’s transportation budget.

(…The state could also privatize the often-troubled Department of Driver Services while they’re at it.)

Good column, Charlie. Again, keep up the good work on transportation and keep hammering home the importance of adequately funding transportation in a political environment where state government seemingly would largely prefer to ignore the issue as much as possible for political convenience.

At this point we may not have a choice as to whether or not we want toll roads as the Feds are very-seriously threatening to effectively stop funding the maintenance of the Interstate system. Congress refuses to pass a new transportation bill and wants to largely eliminate federal road funding by lowering the federal motor fuel tax from the current increasingly-inadequate $0.184/gallon down to $0.037/gallon and leaving the collection of funding for Interstates almost completely up to each individual state.

The states will also run severely short on transportation funding possibly as soon as August 1st of this year if Congress refuses to pass a new transportation funding bill by that date.

Our choices are really not all that attractive at this point. Either we jack up state motor fuel taxes by collecting them as a percentage of the amount of gas purchases and indexing them to inflation to cover as close to 100% of the cost of maintaining the road network (current state and federal road funding doesn’t even cover 50% of maintenance costs by most accounts and is mostly borrowed by the feds who are almost bankrupt) AND/OR we implement electronic tolling on controlled/limited-access roadways and sell them to private investors through long-term leases.

Either way, the transportation costs that have been hidden from the public for so long for political expediency are about to become highly-visible out of financial necessity. I guess it turns out that Freeways weren’t really all that “free” after all.

One thing that I can say is that after years of underpaying transportation costs, suddenly having to pay the real cost of transportation funding is likely going to come as a huge sticker shock. But with the feds effectively bankrupt from decades of borrowing most of its budget (including for transportation) and with transportation funding from current sources about to completely dry up, what other choice do we have at this point?

We can’t continue to borrow up to 75% of our transportation budget each year for eternity. At some point we do have to pay back the money we’ve borrowed (see GDOT) and at some point we also have to collect enough money to cover our current and future transportation costs….It ain’t pleasant, but it is what it is.

They’re proposing to start the bank with $10 billion of seed money that would leverage hundreds of billions of dollars, according to their projections. “Private capital is sitting on the sidelines,” Kerry said. These senators, and many more who are expected to co-sponsor the bill, want to see those private funds put to work.

The BUILD Act will not include any grants and will only fund revenue-generating projects that can repay a loan. The White House had proposed a $30 billion infrastructure bank that includes grants, but Kerry says that given the current climate, they preferred to stick only with projects that will generate revenue, and they’ve pared it down to a size they think lawmakers on both sides of the aisle can accept……….

Using a few billion dollars in public money to leverage hundreds of billions of dollars in infrastructure projects is a good concept which is a definite step in the right direction in this era where funding is quickly drying up from traditional sources.

“Congress refuses to pass a new transportation bill and wants to largely eliminate federal road funding by lowering the federal motor fuel tax from the current increasingly-inadequate $0.184/gallon down to $0.037/gallon” is Tea Party wack that has as much chance of being enacted as the Fair Tax.

General revenue, of which a good bit I’ll grant is borrowed, has been used to supplement the Highway Trust Fund for federal transportation spending for a number of years. Federal transportation spending is not “mostly borrowed by the feds”.

With the $0.184/gallon federal motor fuel tax having not been raised in 21 years (since 1993), with the amount of federal motor fuel tax revenue collected not keeping up with the inflationary costs of maintenance and capital expenditures, with the national debt at about at least $18 trillion and counting and with a state like Georgia getting 62% of its inadequate transportation budget from the deeply-indebted federal government, it does indeed appear that much (if not most) federal transportation spending is borrowed at this point in time.

It’s been abundantly well-documented that the amount of revenue collected from federal motor fuel taxes is not keeping up with inflationary costs. On top of that, the federal highway trust fund is slated to run out of money in early August if Congress does not allocate $9.7 billion from the largely-borrowed General Fund to keep the almost completely-depleted highway trust fund solvent.

Any way that it’s sliced and diced we are running severely low on transportation funding because the states and the Feds just simply do not collect anywhere near enough in transportation funding.

“Increase the federal motor fuel tax a nickel a year for three years, then index it to inflation and general fleet mileage until other user-based revenue sources are available.”

…That’s not a bad idea, but the only problem is that we are in a political environment where very few politicians want to be on record as having voted for a tax increase, no matter how important the reason may be.

Increasing the federal motor fuel tax and then indexing it to inflation in this political environment where people are already screaming about the price of fuel and where many federal politicians want to cut and/or eliminate as much federal spending as possible may not even be possible.

There are a few things government should do, roads and bridges should rank right up there.
The bad news is there is little trust the tax revenue will be used properly as we saw when ARC counties voted down TSPLOST. The metro counties were asked to throw their money in the pot for a promise to get a big hunk back from the downtown boys. No thanks.

The lack of public trust that the revenue from a regional T-SPLOST would be used properly goes back to the well-documented problems that state government has had with ethics and incompetence in transportation management over the years.

Heck, if state government had been more competent in managing transportation there likely would not even be the supposed need for a T-SPLOST type referendum to fund regional economic development and transportation needs.

Just because some rural 70 year old bridge in the middle of nowhere that is served by only a 1000 cars a day is not as proportion to the end users does not mean you can ingnore it until it collapes and kills some one.

Oh no worries Ellynn. It is not rural 70 year old bridges that saltycracker wishes to deny transportation funding to. It is ITP projects. The best indicator of that was “And then utilizing it for what mode is needed.” It was a reference to MARTA, the Beltline, the MMPT and the much-despised (completely out of proportion to its actual cost, 2/3 of which is being paid for by the feds by the way) streetcar.

Also, his “In Bill Dawars last statistical post, with some interpretations, it appeared the job growth was primarily around metro Atlanta, OTP” is total nonsense. The only “interpretations” that he has is what he personally chooses to believe, backed up with his own personal experience of driving in rush hour traffic on the downtown connector and noticing that the flow away from the city is greater than the flow of people towards the city. The fact that people who live and work in the city have no need to take the connector or any other highway but rather can avoid it with either city streets or MARTA does not fit in his advanced statistical models.

It just the same “Atlanta is the next Detroit” stuff. Which totally ignores A) the city’s growing population (and gentrifying with high wage earners incidentally … Atlanta will no longer be majority black by the next census, and its population will exceed 500,000 for the first time ever), B) its construction boom (heavily driven by the Beltline and streetcar projects) or C) the string of corporations locating their headquarters, regional offices, or IT/research divisions to the city (with NCR moving from Gwinnett to downtown next in line as soon as they finish working out the details with Georgia Tech) or And that the Braves leaving and allowing the Turner Field area to be redeveloped by Georgia State and private developers at no cost to the city (as opposed to the 1/3 of a billion dollars of improvements that the Braves wanted and would have kept nearly all the profits from themselves) will actually increase the number of residents in the city, and replace the low salaried, seasonal Turner Field employees with far more high paying permanent jobs as well as FINALLY complete the transition of GSU from being a night business commuter school to a major urban research university, meaning that GSU will be a magnet for jobs and startups in Atlanta the way that Georgia Tech is. But mention, you know, reality to that ilk as opposed to what they desperately want to believe, it will blow right past them like whistling Dixie.

But as to your actual point, I agree. But unfortunately, neither party in Georgia has doing anything for “the second Georgia” on their agenda right now. If Jason Carter wins, his agenda will be entirely ITP, because that has been the agenda of the DPoG ever since the middle and south Georgia Democrats left for the Republican Party in the 1990s, leaving the party controlled by the “urban Democrats”, both the white progressives and the CBC. And if Nathan Deal wins, the RPoG will work to continue the focus primarily on the suburbs. Which means that the rest of Georgia will continue to be neglected in terms of infrastructure, education, health care, economic development etc.

But hey, do not feel THAT sorry for them. Please recall that a major reason why T-SPLOST failed in “the other Georgia” too (despite those areas needing transportation revenue and projects even more than metro Atlanta does) was the scurrilous, southern strategy dog whistle rumor that their T-SPLOST dollars would be used to fund MARTA. A lot of good projects that would have created a ton of jobs had the project gone through – including but not limited to UPS promising to put a regional office at a south Georgia airport had it passed and its revenue been used to make the necessary upgrades that it needed – because folks in those desperately poor areas thought that it was an attempt by THE MUCH HIGHER INCOME PEOPLE in Fulton-DeKalb to take their precious nickels and dimes away from them. Well, if you are going to insist on having a mindset from the Great Depression, you need to realize that a Great Depression economy comes with it …

Yes, because the poorer black folks are being displaced by your ‘gentrification’ out to the suburbs. What we have is the reverse of the old ‘white flight.’ More African-Americans from in-town are being bought or priced out of their neighborhoods and moving to the cheaper suburbs, and rich whites in the burbs are moving in-town so they can continue to look down their noses at all the poor people, be they black, white or purple.

The problem is not the federal highway funding, but how we ignore the state level ones that could help lower the traffic on the federal level systems. We also almost always place the Altanta area as being more important then the rest of the state for inferstructure funding.

Ellynn, it’s moderated some of late, but there’s a long history of a transfer of motor fuel tax dollars from metro Atlanta to rural Georgia. And it clearly shows in the lack of congestion and generally better condition of rural state highway infrastructure.

And that rural bridge used by only a 1,000 cars a day? Close it if its reconstruction is a large expense and the alternate route is not excessively long. Sure it will cost road users more time and money, but users aren’t paying enough, and the additional time it’s no different than the delay imposed on metro Atlanta road users due to lack of capacity.

It’s an election year and the Governor has unexpectedly found himself to be in a little bit of a tight spot.

I don’t necessarily condone frequent suspensions of automatic state fuel tax increases (particularly in this current transportation funding environment where the state is running severely short on road maintenance revenue), but I do understand as you only get one time to run for re-election.

The Eisenhower Interstate Highway System is actually a successful federal program and you guys want to privatize it? Return property that was confiscated from private ownership back to other private owners in order for them to make a profit? Shuuuuurrrrrrrre. That privatization thing has worked so well for us with misdemeanor offenders let’s just privatize the whole damn government.

The Highway Trust and its original intentions would be fine if the gas tax had been left to keep pace with inflation and Transit had not been thrown into the mix in 1982. Not saying we don’t need Transit, it just shouldn’t be funded by the gas tax.

When controlled-access roads are privatized, the roads are still owned by the public but the right to make a profit off of the road is term-leased out to a private entity along with all of the expenses that the public road may incur during the life of the lease. Leasing a publicly-owned road out to a private entity basically eliminates the cost to the government of maintaining a road for an extended period of time (roughly a period of between 20-100 years depending on the terms of each individual lease).

I completely agree with your points that federal motor fuel taxes should have been indexed to inflation early-on and that transit should not be funded by motor fuel taxes that cannot even adequately fund the road network. Transit should be funded separately with revenues from private real estate investment, narrowly-targeted Value Capture taxes, inflation-indexed distance-based fares and the aggressive sales of both individual and major corporate sponsorships.

Big financial leverage guaranteed by taxpayers is a weapon of mass destruction. The idea of creating a bank or new layer of bureaucracy, outside or inside the DOT, to do that should give folks the shivers. Extreme caution is required.

Those are some good points. Public-private partnerships must be utilized with great care.

(…See one of the earlier incarnations of the I-75/I-575 NW Managed Lanes that Governor Deal very-wisely backed the state out of because the agreement with the private investors would have severely-penalized the state to the tune of over $300 million if the state would have made any improvements to any state-owned routes that ran parallel to the lanes during the life of the agreement.)

Well, we don’t have to stay away from all public-private deals, we just have to stay away from the public-private deals where the public takes too much (or any) risk. The public-private deals where the private sector takes ALL of the risk is okay.

…Which is how public-private partnerships should be approached…the private sector should take all of the financial risk.

It should probably kill both the Braves and Falcons deals if the numbers aren’t right for the taxpayers….It also depends on how much those respective local governments can recoup over the long-term from property, sales and income tax revenues generated by those respective stadium deals.

The new Braves’ stadium is much more of a major real estate acquisition-type deal on the part of the Cobb business and real estate community, while the new Falcons’ stadium is a deal to keep Downtown real estate viable.

Both deals used public money which was an action that was inspired by the first rule that the mega-wealthy learn and operate by: Always use OPM (Other Peoples’ Money) to make money….Wealthy people are taught to NEVER risk their own personal money to make money…always let someone else take the financial risk….Which is a critically-important rule that we need to learn and operate by going forward when it comes to financing important transportation projects.